AGENDA

clTYoFmKL^^4il3JUNI2 PH 3^ lU

TO: DEANNA J. SANTANA

CITY ADMINISTRATOR

REPORT

F R O M : Fred Blackwell

SUBJECT: ENA with UrbanCore-integral

for 12"' St Remainder Parcel

DATE: May 30, 2013

City Administrator
Approval

Date

COUNCIL DISTRICT: 2
RECOMMENDATION
Staff recommends that the City Council approve:
A Resolution Authorizing an Exclusive Negotiating Agreement with UrbanCore-Integral,
LLC for Development ofthe 12"' Street Remainder Parcel located at 12*^ Street and 2"*'
Avenue.

OUTCOME
This authorization will allow the City Administrator to negotiate and enter into a one-year
Exclusive Negotiating Agreement ("ENA") with UrbanCore-Integral, LLC ("UCI"). During the
ENA period, UCI will refine a project proposal to be vetted in community design meetings and
for City review and permitting approvals, and complete CEQA review: The schedule of ENA
activities will be coordinated with the adoption of the Lake Merritt Station Area Specific Plan
and its associated EIR, especially the environmental review tasks for the Project. The City will
appraise the Property and negotiate with UCI the terms and conditions of a Disposition and
Development Agreement ("DDA").
Entering into this ENA does not constitute a binding commitment on the part of the City to any
project or developer for the 12^"" Street Remainder Parcel.

BACKGROUND/LEGISLATIVE HISTORY
CN

The 12th Street Remainder Parcel ("Property") was previously publicright-of-wayfor that
portion of E. 12th Street situated between 1st and 2nd Avenue. The Property was created as a
Item:
CED Committee
June 25, 2013

Deanna J. Santana, Citj' Administrator

Subject: ENA with UCI for 12* St Remainder
Date: May 30, 2013

Page 2

result of the reconfiguration of 12th Street between Oak Street and 2nd Avenue into what is now
known as Lake Merritt Blvd. The reconfiguration was part of the City of Oakland's Lake Merritt
Park Improvement / 12th Street Reconstruction Project which was funded by Measure DD.
The size of the Remainder Parcel is approximately 0.925 acres or 40,300 square feet and is
bounded by E. 12th Street on the east, by 2nd Avenue and property owned by the Oakland
Unified School District on the south, by newly created open space to the west with frontage
along the Estuary Channel which serves as the inlet and outlet to Lake Merritt, and by Lake
Merritt Blvd to the north (see map included as Attachment A). The Property is also located
approximately eight blocks from the Lake Merritt BART Station, within a quarter mile from
Laney College, a quarter mile to the Oakland Museum, just over a half of a mile to local
convenience shopping, and a mile from Oakland's Downtown City Center.
On June 16, 2011, the Redevelopment Agency acquired the Property from the City for
$2,500,000 plus $5,958 in closing costs for the purpose of controlling development of the site.
The Agency intended to sell the Property with a development agreement. In February of 2012,
with the dissolution of Redevelopment, the Property was transferred to the Oakland
Redevelopment Successor Agency by operation of law.
In December 2012, staff issued a Request for Proposals to those developers who had shown
interest in the Property. Staff received two proposals and established a selection committee to
review the proposals and interview the two respondents to the RFP. Staff recommends entering
into a 12-month ENA with UCI based on the development team's collective experience and their
proposal to purchase the Property and develop a residential mixed-use project.
As of May 2013, the State Controller's Office has preliminarily determined the Property is a part
of the Redevelopment claw back order which means this property transaction must be reversed
and the Property is to be returned to the City. Under the City's control, the Property is no longer
a part of the Successor Agency's Long Range Property Management Plan and so staff no longer
needs to wait for approval of that Plan (by the Oakland Redevelopment Successor Agency
Board, Oakland Oversight Board, and State Department of Finance) before seeking Council
authorization for an ENA with UCI for the development of the 12th Street Remainder Parcel.
UCI is a strategic partnership between Urban Core Development, a Bay Area-based real estate
developer and Integral Development, an Atlanta-based developer who is the equity partner. The
development team also includes Oakland-based architect Pyatok Architects, San Diego-based
architect AVRP studios, and contractors Suffolk and Davis Reed JV. In response to the City's
RFP, UCI proposed to purchase the Property for $4,569,500 and develop an iconic 24-story
high-rise (240 feet) tower with approximately 247 residential units, 201 parking spaces and
5,000+ square feet of ground floor retail and/or community space.

Item:
CED Committee
June 25-2013

Deanna J . Santana, City Administrator

Subject: ENA with UCI for 12'^ St Remainder
Date: May 30, 2013

Page 3

ANALYSIS
UCI's proposed project is consistent with the Administrative Draft Lake Merritt Station Area
Specific Plan, issued in July 2012 ("Specific Plan"). The Property is considered an ideal
development site for high density housing over ground floor retail and has been identified as a
Primary Gateway Opportunity Site in the Specific Plan. The Specific Plan will provide design
guidelines and inform updates to both the General Plan and Zoning. The proposed rezoning will
accommodate higher densities and transit oriented development.
The Redevelopment Agency's acquisition price was based on a Fair Market Value Appraisal
considering the highest and best use of the property based on the existing zoning and estimated
parcel size. The value will likely change pending completion of the final Parcel Map and the
proposed zoning recommended pursuant to the Specific Plan and changing market conditions.
The completion of the Parcel Map and the Specific Plan are in process during the proposed 1 year ENA period and once the Parcel Map is completed and the Specific Plan adopted, the City
will commission a new MAI Fair Market Value appraisal. UCI's proposal offered as much as
$4,569,500 for land purchase pending appraisal, completion of the approved entitlements and
close of the financing.
The Schedule of Performance expected of UCI during the ENA period is shown in Attachment
B. In short, during the ENA period, UCI will:

Complete a market feasibility study and marketing strategy

Hold at least three community design meetings to discuss the potential development plans
for the Project
Complete design plans, including plan for public art and open space
Complete Project environmental review process pursuant to the Califomia Environmental
Quality Act ("CEQA")
Prepare the EIR (or other CEQA document as appropriate) for the Project,fromissuing
the Notice of Preparation ("NOP") and finally certifying the CEQA document
Obtain all necessary planning approvals. The approval process will include public
hearings with the Planning Commission, Design Review Committee, and the Parks and
Recreation Advisory Committee
Obtain financingfromlenders and equity partners
Negotiate the terms and conditions of a DDA with the City, based on City's appraisal of
Property

Once UCI completes ENA activities and assuming parties can agree on terms of a DDA, staff
will then retum to the City Council with a recommendation to execute a DDA between the City
and UCI.

Item:
CED Committee
June 25,2013

Deanna J. Santana, Cit\' Administrator

Subject: ENA with UCI for 12"' St Remainder
Date: May 30, 2013

Page 4

PUBLIC OUTREACH/INTEREST
UCI will coordinate its public outreach with the outreach efforts of the Specific Plan that will be
simultaneously underway. Also, UCI will work through citizen-led groups such as Coalition of
Advocates for Lake Merritt (CALM) to host at least three community design meetings during the
ENA period. UCI will provide the workshops with 3-D modeling kits, along with a model of the
site and its surroundings, and facilitate discussion of the options in order to move toward
consensus solution that achieves broad public appeal.
Staff received public comments to the Draft EIR for the Emerald Views project (a 42-story, 370
unit residential high-rise) proposed on the privately-owned Schilling Gardens site located next to
Snow Park. Some comments expressed the desire for the EIR to study as an altemative a land
swap with the 12th Street Remainder Parcel, so that the historic garden site could be retained. At
the time of the Draft EIR, such a land swap was deemed as not a feasible altemative to be
analyzed because the parcel did not yet exist and the Measure DD constmction was not
scheduled to be completed for several years. Even as the Measure DD improvements continued
toward completion, the developer of Emerald Views has not expressed interest in the Remainder
site. Further, the idea of preserving the Schillings Gardens site through City acquisition - either
through a land swap or some other means - still presents the challenge to the City to identify the
funds required for necessary on-site improvements and maintenance. Staff estimates the costs of
the land swap to be at least $750,000 for on-site capital improvements, $100,000 a year for
maintenance, and the loss of about S4.5 million that could be gained from the sale of the 12'^
Street Remainder Parcel.

COORDINATION
The Office of Neighborhood Investment coordinated this report with the City Attomey's Office,
the Budget Office, the Department of Planning & Building, and UCI. Also, Measure DD project
staff who are working on the landscaping plans for the newly created open space adjacent to the
Property are aware of UCI's development proposal.
During the ENA period, it is vital that the environmental review tasks for the Property be well
coordinated with the City's preparation of the EIR for the Lake Merritt Station Area Specific
Plan. Planning staff have been assigned to this Project to ensure this coordination. Further, UCI
will also need to coordinate its project proposal with the development plans of neighbors of the
Property to the south (Oakland Unified School District) and to the west (City's new open space
created by Measure DD improvements).

Item:
CED Committee
June 25,2013

Deanna J. Santana, Cit\' Administrator

Subject: ENA with UCI for 12^*" St Remainder
Date: May 30, 2013

Page 5

COST SUMMARY/IMPLICATIONS
The proposed legislation does not commit the City to expenditure of any funds. UCI will bear
sole responsibility for all costs associated with developing the project for approval, including
consultant fees (e.g. for market study and designs and CEQA consultant), permitting fees, legal
fees, financing expenses, etc.. The ENA shall require payment of a $25,000 Project Expense
Payment by UCI for purposes of reimbursing City for its staff costs and third party expenses
such as appraisal costs.
The sale of the Property under an eventual DDA could generate as much as $4.5 million for the
General Fund.

POLICY ALIGNMENT
The Administrative Draft of the Lake Merritt Station Area Specific Plan has identified the
Property as a development opportunity site and proposes rezoning the site for high density
residential. UCI's proposed use of the property is consistent with the intent of the General Plan,
Redevelopment Plan and Specific Plan, all of which have included extensive community
engagement processes.

SUSTAINABLE OPPORTUNITIES
Economic: The sale to UCI would generate land sale proceeds of up to $4.5 million and facilitate
development of housing and a modest amount of neighborhood-serving retail. The development
would put vacant underutilized land into productive use. The construction of the project could
provide significant employment at the site. Staff assessment of project employment benefits
includes approximately 252 constmction jobs, five FTE retail/commercial jobs and nine FTE
permanent jobs in the residential portion. The Project is anticipated to generate significant tax
benefits to the City, including $899,286 in annual property taxes, $135,000 in annual sales tax,
and $83,712 in annual business license tax.
Environmental. The Project proposes to incorporate green building and energy efficient
components both during constmction and occupancy, such as a vegetative roof, a solar thermal
system and a waste management system to facilitate recycling. As an infill project that develops
in already built-up areas, this Project reduces the pressure to constmct on agricultural and other
undeveloped land, and thereby contributes to the prevention of urban sprawl. The location ofthe
Project in proximity to major public transportation nodes will likely encourage project residents
and retail customers to use BART and AC Transit.

Item:
CED Committee
June 25.2013

Deanna J. Santana, City Administrator

Subject: ENA with UCI for 12* St Remainder
Date: May 30, 2013

Page 6

Social Equity: Developer proposes a community participation process that engages a variety of
stakeholders so that the Project can be informed by a wide-range of voices. During the proposed
E N A period, UCI will host at least three community design meetings to discuss the potential
development plans so that the best design possible can be created for the location. Elements of
the development proposal - such as possible improvements & maintenance of adjacent park
space and an art gallery in lobby- would benefit the community at large and not solely project
residents. Also, the residents brought in by a high density project will contribute to Oakland's
diversity and the demand that is needed to support the growing economy.
For quesfions regarding this report, please contact Hui-Chang L i , Urban Economic Analyst II, at
510-238-6239.

Respectfully submitted.

Fred Blackwell, Assistant City Administrator

Reviewed by:
Gregory Hunter
Office of Neighborhood Investment
Patrick Lane, Redevelopment Manager
Prepared by:
Hui-Chang Li, Urban Economic Analyst II

Item:
CED Committee
June 25.2013

Attachment A: 12th Street Remainder Parcel Map, before Measure DD improvements

Attachment A: 12th Street Remainder Parcel,

& Other Opportunity Sites of Lake Merritt Station Area Plan
*
A

p
I

f Remainder
Remal
Parcel
I Opportunity Siites
I with Communi
Agreement o r
Vacant Sites
Approved
' Development
(not yet under
construction)

BAPCT Station
Entrance
RanningArea
(of Lake Merritt
Station Area Plan)

ATTACHMENT B: EXCLUSIVE NEGOTIATING AGREEMENT - SCHEDULE OF PERFORMANCE

Property: 12th Street Remainder Parcel
Develaper: UrbanCore-integral (UCI)
Approximate CED approval:
Approximate City Council Approval:
Negotiation Period:
Approximate Execution of ENA:
Project Expense Payment:

June 25, 2013

July 2, 2013
12 months w 180 day extension option
July 2, 2013
$25,000
Within Number
of C a l e n d a r d a y s
of t h e
Commencement

ENA SCHEDULE OF P E R F O R M A N C E
C E Q A & -';"

Citv p r o v i d e s all eKisting e n v i r o m e n t a l , g e o l o g i c a l , e n g i n e e r i n g and o t h e r reports a b o u t

PERMITS

Property's c o n d i t i o n

DESIGN

D e v e l o p e r retains design t e a m to p r e p a r e c o n c e p t plans

MARKET/

C o m p l e t e m a r k e t feasibility study

STUDY
DESIGN

First public meetrng on p r o p o s e d d e v e l o p m e n t plan

PROJECT

D e s c r i p t i o n of financial and legal structure of the D e v e l o p m e n t T e a m , including partnership

T E A M . - .

a g r e e m e n t s , joint v e n t u r e a g r e e m e n t s , etc.

PROJECT

Balance s h e e t s and i n c o m e / l o s s s t a t e m e n t s for last 2 v e a r s ( 2 0 1 1 , 2012) for D e v e l o p m e n t T e a m ;

TEAM

. - including Developer's expanded team

PROJECT

* D e v e l o p e r ' s LLC status

TEAMV,,, '.
PROJECT '

D e v e l o p m e n t t e a m ' s e x p e r i e n c e i n c l u d i n g : architect, structural e n g i n e e r s , general contractors,

TEAM

m a r k e t i n g S real estate f i r m
-. D e v e l o p m e n t t e a m ' s litigation status

PROJECT,

TEAM"= ' '..

of t h e

Approx due date

Negotiation

a s s u m i n g July 2

Period

execution
30

o:-Aug-13

30

Ol-Aug-13

60

31-Aug-13

60

31-Aug-13

90

30-Sep-13

90

30-Sep-13

90

30-Sep-13

90

30-Sep-13

90

30-Sep-13

90

30-ep-13

120

30-OC1-13

D e v e l o p e r retains e n v i r o m e n t a l consultants to p r e p a r e d o c u m e n t s for CEQA review of Project.

CEQA'a

D e v e l o p e r ' s C E Q A consultant shall c o m p a r e p r o p o s e d d e v e l o p m e n t project w i t h t h e

PERMITS

d e v e l o p m e n t p r o g r a m a s s u m e d for the Lake M e r r i t Station A r e a Plan.

DESIGN'

. . S e c o n d public m e e t i n g on p r o p o s e d d e v e l o p m e n t plan
; S u b m i t Project D e s c r i p t i o n for e n v i r o n m e n t a l review p u r p o s e s t o City

CEQA&
PERMITS

120

30-Oct-13

FINANCING

P r o f o r m a s : budget, s o u r c e s & uses of f u n d s , 1 0 - y r c a s h f l o w , o p e r a t i n g budget

150

29-NOV-13

FINANCING

Project d e v e l o p m e n t schedule

ISO

29-NOV-13

150

29-NOV-13

150

Z9-NOV-13

ISO

29-NOV-13

150

29-NOV-13

180

29-Dec-13

240

27-Feb-14

240

27-Feb-14

240

27-Feb-14

FINANCING - Ust of lenders a n d investors a p p r o a c h e d

S u b m i t a p p l i c a b l e z o n i n g a n d land use p e r m i t p r e - a p p l i c a t i o n s and a schedule of a p p r o v a l s .

CEQA'&'; V
PERMITS'

D e v e l o p e r ' s CEQA consultant shall review t h e Lake M e r r i t t Station A r e a Plan E n v i r o n m e n t a l

Impact Report (DEIR) t o d e t e r m i n e if it is a d e q u a t e for C E Q A clearance o f t h e p r o p o s e d

CEQA S " '

PERMITS

d e v e l o p m e n t project, any a d d i t i o n a l w o r k that may be r e q u i r e d , a n d if t h e r e is a n y t h i n g u n i q u e

a b o u t t h e project a n d / o r its l o c a t i o n . D e v e l o p e r shall m e e t w i t h t h e City to discuss the p r o p o s e d
CEQA a p p r o a c h .
Third public m e e t i n g o n p r o p o s e d d e v e l o p m e n t plan

DESIGN :

B a s e d o n the specific CEQA a p p r o a c h for the project. D e v e l o p e r ' s CEQA c o n s u l t a n t shall prepare
a d r a f t s c o p e of w o r k , based u p o n the City's " G u i d e l i n e s for E n v i r o n m e n t a l Consultant Contracts
C o n c e r n i n g Private D e v e l o p m e n t Projects" (dated 1 / 5 / 1 2 ) , for City review and a p p r o v a l , t h a t

CEQAS'^

~; a n a l y i e s t h e specific e n v i r o n m e n t a l t o p i c s a n d type of CEQA d o c u m e n t t h a t Is r e q u i r e d t o

PERMITS

c o m p l e t e C E Q A clearance - Initial Study, A d d e n d u m a n d / o r S u p p l e m e n t a l EIR.

S c h e m a t i c Design Plans, plan for public art, and list of public i m p r o v e m e n t s , including adjacent

DESIGN \

park

CEQAS

S u b m i t a p p l i c a b l e z o n i n g and land use p e r m i t a p p l i c a t i o n s and a s c h e d u l e of a p p r o v a l s .

PERMrrs'
If s u p p l e m e n t a l / s u b s e q u e n t EIR is r e q u i r e d . D e v e l o p e r ' s C E Q A consultant shall cause the

CEQA&
PERMITS .

' issuance of a N O P subject t o City review a n d a p p r o v a l

FINANCING

U P D A T E D & REFINED: Project d e v e l o p m e n t s c h e d u l e

CEQA&

^ ... If A d d e n d u m a n d / o r other non-EIR CEQA d o c u m e n t is r e q u i r e d , s u b m i t an adminstrative draft of

PERMITS .

t h e CEDA d o c u m e n t

MARKET

C o m p l e t e m a r k e t i n g strategy

STUDY
U P D A T E D & REFINED: P r o f o r m a s : budget, s o u r c e s & uses of f u n d s , 1 0 - y r c a s h f l o w , operating

240

27-Feb-14

270

29-Mar-14

270

29-Mar-14

270

29-Mar-14

FINANQNG

LOI f r o m l e n d e r s and equity partners t o f i n a n c e project

300

2S-Apr-14

DDA

City s u b m i t s final appraisal report

300

28-Apr-14

DDA

C o m p l e t e DDA N e g o t i a t i o n s

330

28-May-14

CEQA&

C o m p l e t e C E Q A review. D e v e l o p e r : C o m p l e t e e n v i r o m e n t a l a s s e s s m e n t , ID site mitigations. City:

PERMITS

c o m p l e t e e n v i r o r e v i e w , file Notice of D e t e r m i n a t i o n ,

330

2S-May-14

360

27-Jun-14

FINANCING-:

O b t a i n all necessary p l a n n i n g a p p r o v a l s . T h e a p p r o v a l process will i n c l u d e public hearings w i t h

CEQAS
PERMITS

budget

t h e P l a n n i n g C o m m i s s i o n , Design Review C o m m i t t e e , a n d the Parks and Recreation A d v i s o r y

C o m m i t t e e (PRAC).

n i l O* I U

Apprbveci asJlo FormAnd Legality;

Dteputy City Attorney

OAKLAND CITY COUNCIL

RESOLUTION NO.

C.M.S.

RESOLUTION AUTHORIZING AN EXCLUSIVE NEGOTIATING AGREEMENT

WITH URBANCORE-INTEGRAL, LLC FOR DEVELOPMENT OF THE 12TH
STREET REMAINDER PARCEL LOCATED AT 12TH STREET AND 2ND
AVENUE

WHEREAS, the City owns or will own approximately 0.925 acres of property bounded by East
12'^ Street on the east. Second Avenue and property owned by the Oakland Unified School District on
the south, newly created open space to the west, and Lake Merritt Boulevard to the north (the
"Property"), commonly known as the 12th Street Remainder Parcel; and
WHEREAS, the Property was previously public right-of-way for that portion of E. 12th Street
situated between 1st and 2nd Avenue; and
WHEREAS, on December.21, 2012, the City issued a Request for Proposals to develop the
Property; and
WHEREAS, UrbanCore-integral, LLC ("UCI") submitted a proposal to purchase the Property
and develop a 24- story high-rise with approximately 247 residential units, approximately 5,000 square
feet of ground floor retail and/or community space, and approximately 201 parking spaces (the
"Project") on the site; and
WHEREAS, the City and UCI wish to enter into a period of preliminary study and exclusive
negotiations over the proposed Project, understanding that this does not constitute a binding
commitment on the part of the City to any project or developer for the Property; now, therefore, be it
RESOLVED: That the City hereby authorizes the City Administrator to negotiate and enter into
an Exclusive Negotiating Agreement ("ENA") with UCI for the purposes of developing a project
proposal for City review and approval, conducting California Environmental Quality Act ("CEQA")
review and approval, and negotiating the terms and conditions of a Disposition and Development
Agreement ("DDA"); and be it
FURTHER RESOLVED: That the initial exclusive negotiating period will be for 12 months
from the date of this Resolution, with the option by the City to extend said period by an additional 180

days with the approval of the City Administrator in her sole discretion; and be it
FURTHER RESOLVED: That the City shall require payment of a $25,000 Project Expense
Payment by UCI for purposes of reimbursing City for its staff costs and third party expenses; and be it
FURTHER RESOLVED: That the ENA shall be reviewed and approved as to form and legality
by the City Attomey's Office prior to execution; and be it
FURTHER RESOLVED: That the City finds and determines, after independent review and
consideration, that this action complies with CEQA because it is exempt from CEQA pursuant to
Section 15262 (feasibility and planning studies). Section 15306 (information collection) and Section
15061(b)(3) (general rule) ofthe CEQA Guidelines; and be it
FURTHER RESOLVED: That the City Administrator or her designee shall cause to be filed
with the County of Alameda a Notice of Exemption for this action; and be it
FURTHER RESOLVED: That the City Administrator isfiirtherauthorized to negotiate and
enter into agreements and take whatever action is necessary with respect to the ENA and the Project,
consistent with this Resolution and its basic purposes.

IN COUNCIL, OAKLAND. CALIFORNIA,

PASSED BY THE FOLLOWING VOTE:
AYES - BROOKS, GALLO, GIBSON McELHANEY, KALB, KAPLAN, REID. SCHAAF. and
PRESIDENT KERNIGHAN
NOESABSENTABSTENTION -

ATTEST:

LaTonda Simmons
City Clerk and Clerk of the Council
of the City of Oakland, California